In 2008, it appeared that rising gas prices had made Californians fess resistant to offshore drilling. A Field Poll survey showed that a higher proportion of Californians supported the idea of drilling for oil or natural gas along the state’s coast than in 2005 ( The Wall Street Journal , July 17, 2008). Assume that random drilling for oil only succeeds 5% of the time.
An oil company has just announced that it has discovered new technology for detecting oil. The technology is 80% reliable. That is, if there is oil, the technology will signal “oil” 80% of the time. Let there also be a 1% chance that the technology erroneously detects oil, when in fact no oil exists.
In a report, use the above information to:
1. Prepare a table that shows the relevant probabilities.
2. Find the probability that, on a recent expedition, oil actually existed but the technology detected “no oil” in the area.